Sensex Poised for Bullish 2026: Morgan Stanley Outlook
Global brokerage Morgan Stanley has forecast a bullish trajectory for India’s benchmark BSE Sensex, projecting that the index could reach 107000 points by December 2026 under its bull-case scenario. The firm assigns this scenario a probability of around 30%.
The projection is based on assumptions of oil prices staying below US 65 per barrel, a favourable global trade environment, supportive domestic policies, and strong nominal GDP growth. In this scenario, Sensex earnings are expected to grow at a compound annual rate of nearly 19 percent from FY25 to FY28.
Base-Case and Bear-Case Scenarios
In its base-case outlook, which Morgan Stanley assigns a 50 percent probability, the Sensex is estimated to touch 95000 by end-2026, indicating continued upside for the Indian equity market.
However, the bear-case scenario, with a 20 percent probability, places the index near 76000 by 2026 if global risks rise. These risks include oil climbing above US 100 per barrel, a slowdown in global growth, or escalated trade conflicts.
Market Structure and Sector Outlook
The brokerage notes that India’s equity structure is shifting. Foreign portfolio investor holdings are at multi-year lows, domestic inflows remain strong, and corporate earnings appear to be in the mid-cycle phase. With valuations moderating compared to recent peaks, Morgan Stanley believes conditions are favourable for a multi-year growth phase.
Its sector stance includes overweight positions in financials, consumer discretionary, and industrials, while being underweight on energy, materials, healthcare, and utilities.
Caution on Global Risks
Morgan Stanley warns that global uncertainties remain a major variable. Sharp fluctuations in energy prices, a potential US recession, or renewed tariff tensions could impact market performance. Despite these risks, the brokerage expects India to regain momentum in equity markets through 2026.
